No abstract

Disclosures play a pivotal role in addressing the issues related to information asymmetry and agency costs of firms. Voluntary disclosures are those disclosures which are beyond the compulsory ones and are communicated portraying a better image of the company and its prospects in front of its investors. Therefore this study intends to extend various aspects of corporate disclosure practices, mainly voluntary disclosures of selected Indian companies. Under contract theory of economics, information asymmetry leads to superfluous decisions because of information gap between the parties. It is also important to assess the possible economic consequence of voluntary disclosures i.e. the incentive by way of enhanced firm performance. The results of the study obtained through correlation and regression approach are very encouraging and are evident of stock returns responding to corporate voluntary disclosures, financial as well as non-financial, particularly in the recent years. The effect of increased disclosures on stock prices is of possible interest to investing community and stakeholders at large including the policy makers and regulators. It is not just about the level of disclosures but also the type of disclosures e.g. non-financial disclosure like forward looking, social, and environmental which play an important role in enunciating the association between the two variables. The paper sufficiently contributes towards literature on voluntary disclosures. Its major contribution is focused towards economic consequences of disclosures by way of better stock returns and implications for Indian stock market regulator to assess the impact of its policy on manufacturing and non-manufacturing companies listed in CNX 100 index of National Stock Exchange of India.

Annual reports apart from being a means of communication are used as a vehicle of building and improving corporate image. Even the government and its institutions presiding over the corporate sector emphasize on additional disclosures related to corporate governance, corporate social responsibility, corporate sustainability etc. apart from more voluntary financial disclosures to enhance the investor confidence at large. There are a number of studies which argue, corporate governance and its mechanisms or proxies act as catalyst for increased voluntary disclosures while there are a few studies which negate or nullify its role in enhancing voluntary disclosures. Hence it is important at this juncture to find how it is currently placed in Indian context. The findings of this study suggest the lowering importance of proportion of independent directors in the boards of the companies. The variation in the extent of corporate disclosures over a longer period of time is not caused much due to board independence. However the role of board independence and its consistently positive association with voluntary financial and voluntary non-financial disclosures is an encouraging precursor for corporate firms and their varied stakeholders.

The objective of this study is to understand whether firm characteristics explain the extent of corporate disclosures in the annual reports of listed Indian companies. In the field of accounting, voluntary information disclosures have been receiving a lot of attention as they bridge the gap between what is mandatory and what is sought by the stakeholders. Due to the prime focus of corporate disclosure literature on the linkage of company characteristics with the extent of disclosures, it becomes pertinent to study this aspect before studying the policy and regulatory impact. Hence, it is examined what prompts listed corporate entities in an emerging market like India to disclose more. The disclosure scores of Indian CNX 100 companies over a period of five years (2011–2015) related to firm characteristics such as age, size, and listing status were arrived at through content analysis and subsequent coding of the data. The study applied correlation, regression, and t-test to analyze respective scores and firm-specific data accessed from CMIE Prowess and Ace Equity industry databases. The study found firm characteristics such as age and listing status to be non-significant in leading corporations to enhanced disclosures. However, regression results improving with respect to the firm size and almost becoming significant in later years especially in the post-policy period (i.e., post-2013) remains an important takeaway from this study. The study stands on a formidable ground that it is the policy initiatives that are pushing firms to reveal more about their businesses keeping in mind the diverse perspectives of accounting information users